On May 5, 2026, Tennessee enacted SB 2206, the Federal Tax Credit Scholarship Act, as Public Chapter 720, directing the Department of Education to elect into §25F, certify scholarship granting organizations, and submit the list to the U.S. Treasury for tax years after December 31, 2026. The act covers homeschool expenses, which the state's own 2025 program excludes.
On May 5, 2026, Tennessee enacted SB 2206, the “Federal Tax Credit Scholarship Act,” which was signed by the governor and assigned Public Chapter Number 720. The measure, carried by primary sponsor Sen. Jack Johnson (R, District 27), cleared the Senate 27 to 5 on March 19 and the House 75 to 19 on March 30 before reaching the governor’s desk. It is Tennessee’s enabling statute for the federal Education Freedom Tax Credit under Internal Revenue Code §25F, the program that provides a 100% federal income tax credit of up to $1,700 for an individual’s qualified cash contribution to an eligible scholarship granting organization (SGO). The act takes effect for taxable years beginning after December 31, 2026, lining up with the §25F program’s January 1, 2027 launch.
The law spells out the mechanics on the state side. It directs the Commissioner of the Department of Education to elect to participate in the federal program, to certify eligible scholarship granting organizations, to submit that list of certified SGOs to the U.S. Secretary of the Treasury, and to publish the list on the department’s website. The state-level election by the Commissioner is what pairs with the federal advance-election step (IRS Form 15714), which we explain in our coverage of the advance-election mechanism. Tennessee’s Fiscal Review Committee classified the bill’s fiscal impact as not significant, on the basis that the work can be absorbed by existing department staff and resources rather than new state spending. Tennessee now appears on the IRS roster of participating states published June 8, 2026, which we track alongside the running national list of advance-election states.
The detail that sets Tennessee apart is who can use the scholarships. The act’s scholarships cover qualified elementary and secondary expenses, and the fiscal note explicitly states that this includes homeschool expenses, as federal law permits. That is a deliberate contrast with Tennessee’s own 2025 Education Freedom Scholarship Act, the state-funded program that excludes homeschool expenses. In other words, families educating children at home, who are shut out of the state’s flagship 2025 program, are squarely inside the §25F channel that Public Chapter 720 builds. That divergence is part of a broader 50-state pattern we have documented, in which the federal credit reaches homeschoolers in places where state-level dollars do not.
For SGOs and donors, the practical takeaway is that Tennessee has chosen the certification-and-submission route rather than waiting on the sidelines. Once the Department of Education certifies organizations and publishes the list, qualifying nonprofits can begin accepting contributions that yield the dollar-for-dollar federal credit, a figure the statute already settles at $1,700 even while joint-filer treatment remains contested, which we cover in our breakdown of the cap. Because §25F lets any qualifying nonprofit operate as an SGO, in-state organizations and national operators alike can compete for Tennessee donors and families. Operators standing up a program, in Tennessee or elsewhere, can run a §25F operation on software purpose-built for the credit, and our directory of scholarship granting organizations and explainers track who is forming programs in each state.
What to watch next is the certification timeline: how quickly the Department of Education names eligible SGOs, submits the list to Treasury, and publishes it ahead of the January 1, 2027 launch, and how many organizations choose to serve Tennessee’s homeschool families specifically. With the enabling statute on the books, the question shifts from whether Tennessee participates to who administers the dollars. We track Tennessee’s status and participating organizations on the Tennessee state page and follow the national rollout on the participation map as more states finalize their elections.
